Good afternoon. Good evening. We are here today to present the quarter four results and the presentations. You can go to the next slide, please. Today's speaker, it's me, Ulf Ritsvall, CEO of NEXT Biometrics. And it's also Eirik Underthun, the CFO of NEXT Biometrics. Next slide, please. Today we will cover the following topics. I will summarize the 2024 on a high level. We will go through the Q4 highlights, the Q4 financials, as well as I will have a few slides on business and market updates, outlook, and then we end the session with a Q&A. We can take the next slide, please. 2024 was a year of transformation and growth in this company. We have taken the revenue growth from NOK 34 million to NOK 73 million. A revenue growth with 109%, which is a very substantial growth, which is a fantastic journey.
We also managed to have a record break-even quarter in Q3 with very high revenues, as well as we had a record high adjusted gross margin for the year at 55%. Two records were broken in 2024. Of course, most important of all, we actually had 18 new design wins, which means 18 new customers during 2024. That means securing the sales pipeline for 2025 and 2026 and onwards. Without customers, we will have no revenues, of course. If you can change to the next slide, please. If you highlight on the Q4, our strong order pipeline is for this quarter continued. As already communicated, the revenue were down compared to our anticipation, as well as down in comparison with Q4 2023. That is because of the L1 pause that UIDAI have set on introducing new products on the market.
I will go through a bit more the status and where we are with that on a later slide. However, we have a very good gross margin, 61% in the Q4 quarter. Again, we are guiding that we will stay above 50%. This was an exceptional quarter in that perspective because of the sales of the product portfolio contained a lot of China high average selling price products. Again, we brought in six new customers, six new design wins. One of the design wins we announced yesterday coming from India, a tablet. It's a tablet for the Indian bank sector. We also had a very, very challenging in the one year ago. I set up a target for getting FAP30 engineering samples within year 2024. And sort of a Christmas gift, we had engineering samples. We sent out a message on that.
I will actually show you the demonstration samples. They are now available and they are out with customers. I also promised to have an MOU within the last year. Actually, that was more a New Year Eve than Christmas gift. December 30, we actually signed an NOK 18 million MOU for the FAP30 device, which will be the NOK 18 million revenue that will start second half of this year since from now until the first half, we are still doing the mass production parts of the FAP30. We also, during Q4, announced an MOU for a new government ID product, actually enhanced FAP20 product. We are now taking a larger portion of the product itself. It means that we will get a higher ASP, average selling price of the product.
We do not only sell the FAP20 standalone, but we are actually also selling the FAP20 in combination with the MCU, which is then bringing us higher ASP. During the quarter, we also expanded our PC portfolio. We expanded it into a very, very closely related technology, which is the touchpads. We have announced already the first design wins in touchpad. It is a keyboard that will be launched during Q1. We are, of course, eager to get additional design wins in this segment. We believe during 2025, we will see additional design wins with the touchpad offering. You can go to the next slide, Claudia. I will hand over the Q4 financials to our CFO, Eirik Underthun.
Hello. Can you hear me? Thank you. Next slide, please. I will now run you through the Q4 financial highlights. On this slide, you can see the summary of the Q4 P&L. Revenues were NOK 13.3 million versus NOK 14.3 million in quarter four 2023. The revenues were impacted by the pause in the India market, as well as the slowness in China that Ulf mentioned. The adjusted gross margin was 61% in quarter four 2024, compared to 45% in quarter four 2023.
This is due to the significantly higher FAP20 and China ID share in the product mix for the quarter. On operating expenses, we ended up with adjusted OpEx of NOK 19.9 million compared to NOK 14.8 million in quarter four 2023. The adjusted OpEx is increased in line with the plan to increase sales and R&D efforts. The adjusted EBITDA was -NOK 11.8 million compared to -NOK 8.3 million in quarter four 2023.
When it comes to cash and cash flow, Next ended the quarter with cash of NOK 62.9 million compared to NOK 45.5 million at the end of quarter three 2024. In the Q4 period, there was a high concentration of sales in December. This impacted the operational cash flow together with the continued late payments on accounts receivables. The positive cash flow from financing was NOK 30.7 million in the quarter. The main message from this quarter is that the India pause and the China market slowness reduced quarterly revenues. Moreover, the company completed a private placement in November 2024. Another highlight was the strong gross margin level in quarter four . Next slide, please. The gross margin has increased significantly in 2024 compared to 2023, and it has stabilized above 50%, as you can see in the graph. The Q4 adjusted gross margin was 61%.
This development can be explained by the change in product mix from the high PC sensors share in 2022 and 2023, and then changing to a situation in 2024 where we have a high share of FAP20 and China ID products, which again have higher margins. With this, I will turn the call over to Ulf again. Thank you.
Thank you, Eirik. We can swap to the next slide. I will now go through the business and market updates. I have five slides, four slides, and I will start with, of course, the unfortunate short-term impact stop in L1 Aadhaar. You can take the next slide, please. As we early communicated, we have a temporary pause in the Aadhaar business, which is the majority of our running business at this moment. Our main partner is up for final approval for actually this incident that happened that made the Indian government stop the rollout of L1 devices. L1 is the new specification in India. There was an accident during Q4. There was spoofing on a competitor device, a competitor product, a competing technology, which made the UIDAI to actually pause this rollout of the upgraded L1 that we have been talking so much about.
It's a short-term impact for NEXT since the majority of the sales are within the Aadhaar system. It actually looks like it's a long-term gain for the company. We have now an increased market opportunity since now the government actually adds requirements on liveness testing. It's a language in biometrics basically means that you remove all sort of dead material instead of a live finger when you actually place your finger on the sensor itself. These stricter security requirements are actually boosting NEXT market share because it will actually remove new competing solutions on the Indian market. We have a strong high security product, which will make sure and actually our positive outlook is that the Aadhaar program is, of course, crucial for India.
It also looks that NEXT Biometrics market share will increase with this shift or additional requirements that the Indian government have. We believe that the business will resume very soon. Our main partner is up for approval, and we are expecting them to pass early March at latest. All the unfulfilled orders will, of course, be delivered in Q1. Let's take the next slide. I think next slide, please. Yes. If I look at NEXT Biometrics, our primary focus is and will be for the next few years be FAP20 sales. We have a competitive edge over competitors. We have lower power consumption. We have a very slim form factor, and we have a competitive price. We have a unique value proposition compared to many competitors. We are replacing all the 18 new customers in 2024. We are actually replacing a competitor.
We are also taking steps in the FAP20 portfolio and the product development actually to stay ahead with the government ID products. That means that we will be having a higher average selling price. We communicated already during Q4 that we have a partner and we have a memory MOU agreement and a NOK 30 million revenue potential starting second half this year with this government ID product. If you look at our go-to-market strategy, we are strategically expanding in the government ID markets. Of course, we are strengthening our presence in India, in China, and beyond. Few examples of that is we have had design wins and shipped products to Malaysia and Pakistan during Q4. As I said, we have this MOU for the Indian governmental projects for a new upgraded government ID product with higher ASP.
If you look at the market size, this is what we have communicated also in the Capital Markets Day one year ago. The market size is between 5 million and 10 million units annually. It's our estimate. Short-term goals, of course, are to achieve break-even quarters with our strong FAP20 sales. That's what I see. That's how we did in Q3, and that's what I will see in the coming quarters as well. Our long-term vision is, of course, to establish a market leadership with 20% market share and setting the industry benchmark for liveness detection and our unique selling points. If you move to the next slide, I will talk about FAP30. The product I showed you is now out for presentation. We are demonstrating it to customers. Compared to FAP20, it has similar or equal unique selling points: low power consumption, extremely slim form factor.
Again, engineering samples are being shipped to customers. We believe we stay on the schedule. We have mass production during 2025, and we will see products available and mass produced during the second half of 2025. The FAP30 market is an even higher security demand market. This also means that it's actually spreading geographically for us in Africa, U.S., South American markets, where we see the majority of the FAP30 going forward. Market size, we have verbally communicated about 1 million units. We believe, actually, we have upgraded. We believe it's between 1 million and 3 million units. Our short-term goals are, of course, finish the product internally, make it mass production ready, and ship at least 100,000 units within 12 months- 18 months.
When I say 100,000 units, maybe it sounds very small, but with an ASP of between $80 and $120 a piece, you can see that it is actually substantial revenue growth for NEXT Biometrics. Similar to the FAP20, our long-term vision is, of course, to have a 20% market share also in this portion of the market. With the initial discussions and feedback from different partners in the ecosystem, our OEMs, we believe this is not just a very, very long-term vision, but it is actually something that we can achieve within short. Repeating, expecting initial purchase orders. Now we have samples with our OEMs. We have demonstrated it. They will now decide and make the mold and the plastic around. During Q2, Q3, we will see the first purchase orders and market deployment in the second half of 2025.
If you look at further strength in this portfolio, this is a huge opportunity for us. Of course, if I look at where we spend our time, it's probably 80% of the time in FAP20, and then a portion of the time on the rest is on FAP30. Again, it's a FAP30. It's more high-end than the FAP20, but it's actually not a replacement for FAP20. It's a totally new different market. It's actually expanding our geographically spread. Good part here is as well, there's a lot fewer competitors compared to in FAP20 because, for example, the technology capacitive will not work. You will not be able to make a capacitive sensor in this size. It will be too much expensive. That's short about our midterm upside, I would say, in the company. Last 29 or 30th of January, we had an Innovation Day.
I would like to summarize that a bit. You can take the next slide, please. As we communicated, we are entering into a new market segment. That is not just because we see that we will shift the focus of this to different sets. We are actually being contacted by large display companies. We believe we have the right technology, and we are now leveraging on our patented active thermal technology, creating a solid long-term roadmap, a technology roadmap for this piece that we actually are R&D are working on. We are now in the stage of validating a licensing model financed solely by global display partners to see how we can address this market. As I said in the face-to-face meeting, we are targeting a demonstration of a prototype at Mobile World Congress in 2027. This is a long-term growth, long-term R&D plan.
This is nothing that the sales organization is focusing on at all. It is nothing the operations are focusing on at all. It is an R&D project. As I explained, there is a huge upside of this technology in this. It is an early phase. It is in our business development. We believe that we have the right technology to build a prototype and later on a mass production ready display where you can have a fingerprint sensing technology throughout the display. This is, of course, tempting to go into the smartphone, for example, but it could also be tablets. It could be other types of displays. This is what we are innovating at this moment. As I said during that call, we go out now because we need to start talking to the ecosystem partners in this. That is how we have communicated.
You can take the next slide, please. I will now move over to summarize, and after that, we'll have a Q&A session. There is a possibility to ask questions online as well. I believe we have received a few questions before on that as well. I'm repeating my message from the Q3 report. We are targeting NOK 180 million -NOK 200 million revenues for 2025. The revenue growth is, of course, coming from the majority of the FAP20 and the increased ASP in the FAP20 portfolio. Toward the later part of 2025, we will see in the product mix, we'll also sell the FAP30. We actually take a stand on the we now have revenue growth. We have larger purchase orders, as you have seen. We actually are changing the way we do the next press releases.
We will send out an equal amount of information, but the parts of new design wins, for example, they will be sent as news on our website and on LinkedIn and emails. The press releases will be dedicated for higher valued revenue, for example, and special occasions in the company, of course, like the quarterly report and annual report and so on. In general, of course, we continue to focus on FAP20 sales. We have our unique offering and competitive advantages. We believe we will achieve the break-even quarters driven by FAP20 sales alone. We have the sort of upside of FAP30 later on this year, which will accelerate the revenue growth.
Short-term, of course, we also focus on the cash collection, which in the report, we are saying repeating that the Q1 will be going down in accounts receivable as we know where the customers are actually launching the different products on the market. Of course, we are prioritizing this to ensure steady cash flow. We will, of course, also communicate around the new innovation. Already now, I can say that the message we sent has already reached strong industry interest. We have been contacted with different international players. This is just the beginning of this journey that we see. This is a bit more long-term, but we will keep you all investors updated with the progress we're making. We will have at least the demonstration in Mobile World Congress in 2027. That's all for the presentation itself. We'll move over to Q&A.
I don't know if we have any questions online, Eirik.
Yes, we have some questions, and it's still possible to ask the questions in the Q&A part of this Teams meeting. You can enter a question in the Q&A bar in the window that you see. The first question, I guess, has already been answered, but there was a question on when will the company start mass production of FAP20. We already said it's in 2025. I don't know if you have any more details on that, Ulf.
I guess you mean FAP30. Mass production ready, it will be mass production ready first half of 2025. First customer deployment and purchase orders and deliveries in second half. Which quarter? It's a bit too early to say.
We, of course, have our internal milestones and so on, but that's the communication we are giving currently.
There is one more here on we have seen a lot of new design wins and announcements, but the current revenue per quarter is indicating that there's something missing. Can you explain this?
Design wins are measured based on different criteria. It could be a new use case, a new market segment. It could be a substantial large order. Design wins are in the early phase. I believe we have been talking about design wins previously. When we announce a design win, it's a customer that has selected the NEXT Biometrics product. It has possibly started integration of that product. It could also be that they have, in its turn, nine months for certification.
It could be three months of doing the plastic round and electronics inside, the integration of the sensor into a separate system. I mean, the 18 announced design wins 2024, you will probably see some of them three months out, we'll see revenue, and some of them will be maybe 12 months out for the deployment of products itself. The more design wins we're adding, some of the design wins make 10,000 pieces, and some larger, of course, can do 100,000 units. We have an example. I mean, we have our partner in India, ACPL. They are delivering a substantial part of the revenue. That's a big OEM in our measures.
Right. There's another question. Sales are mostly through partners and third parties. Do these really need a lot of support?
Is it possible for NEXT to market in the same way in other jurisdictions like U.S., Europe, Latin America? Is the technology also competitive in these other jurisdictions?
Thank you for the—it's a good question. When we sell this sensor itself, this needs to be integrated into a device. That's what the OEM does. It could be done in a tablet, a reader, a PC, or any type of device that's within our market segments. Normally, we are helping them with the integration, with the support. There's a lot of software programming to get this up and running. If the distributors, they don't have that capability of today, they are distributing the product. NEXT Biometrics is helping and supporting the end customer clients to get the product up and running and certified. We are there. We are the biometric expert in this area.
We are taking the customer on a journey towards getting their approval for their product. This can take sometimes, like ACPL, it took 1.5 years to get the L1 at Aadhaar certification. We also see other faster movers that take less than three months. That is why it is so difficult to say, "Okay, there is not one model for all." FAP20-based are mainly targeting India and China. Not so much FAP20 sales will happen in the U.S. or in Latin America or Africa. Actually, if you look at the different sizes, the FAP30, with the FAP30, we will expand our geographical fit because some UN requirements to have voting systems, for example, they are demanding that there is a FAP30 sensor in the voting system and the machine. That is why we are enabling additional geographical areas with the FAP30.
Not saying that we do not sell FAP20 in different regions. We have a Brazilian customer buying FAP20 for access products. We have some U.S. clients. We have African clients, Israeli clients to actually use the FAP20. I am not saying that it is impossible. I am just saying that the market size is smaller for the FAP20 outside India and China.
Thank you. There are no more questions. That completes the Q&A.
Thank you very much. Thank you for listening. I will, of course, have my email available for any other questions or a phone call. Thank you very much, and take care now. Bye-bye.